Law Suits & Courts

Fidelity Response to Foreclosure Freeze

Posted on Friday, October 22, 2010

All Florida Offices and Agents of:
Chicago Title Insurance Company
Commonwealth Land Title Insurance Company
Fidelity National Title Insurance Company
From: FNTG Florida Underwriting Department
Date: October 22, 2010
Re: INSURING FORECLOSED PROPERTIES
Company guidelines require a complete and thorough examination of all foreclosure
proceedings. Any irregularities must be reflected in the title search reports, commitments
and/or policies. Additionally, the closing agent must determine whether to delete any of
the standard exceptions, including rights of parties in possession and construction liens.
Since some of the irregularities may not be easily ascertained by an examination of the
foreclosure proceedings, the title examiner and/or closing agent are encouraged to discuss
possible issues with an underwriter in the Underwriting Department.
As recently reported in the media, many lenders have halted sales of REO (real estate
owned by the bank) properties due to possible inaccurate or improper affidavits being filed
in the underlying mortgage foreclosure action.
Guidelines for closing agents are as follows:
Bank of America
Bank of America and its affiliates (“BofA”) have entered into a master indemnity agreement
with the FNTG family of underwriting companies, which permits the Company to continue
to insure sales in which BofA is the lender or servicer, notwithstanding the possibility of an
inaccurate or improper affidavit filed in the mortgage foreclosure. All offices and agents of
the Company may continue to insure the purchaser of a REO property from BofA or from
the assignee of BofA wherein BofA is identified as the foreclosing lender or servicer.
The title examiner should check the docket sheet of the underlying foreclosure file to make
sure that no motion to set aside, motion for rehearing, or appeal of the foreclosure has been
filed and is pending.
Lenders/Servicers OTHER Than BofA
For closings on or after November 1, 2010, when requested to insure the purchaser at a
foreclosure sale or the purchaser of any REO property from any lender/servicer other than BofA, the Company requires the attached indemnity to be executed by the lender/servicer.
This indemnity was prepared after consulting with the American Land Title Association,
Fannie Mae and Freddie Mac and is now available for use by all title insurers.
The indemnity must be executed by an authorized representative of the lender/servicer on
all sales scheduled to close on or after November 1, 2010. The executed original should
remain in the closing file. This indemnity covers “the submission of incompetent or
erroneous affidavit testimony or documentation prepared in connection with the
underlying foreclosure action and related proceedings”. It does not cover any other on or
off-record defects in the foreclosure proceeding. Therefore, other title defects not covered
by the indemnity should be customarily handled or discussed with a Company underwriter.
The title examiner should check the docket sheet of the underlying foreclosure file to make
sure that no motion to set aside, motion for rehearing, or appeal of the foreclosure has been
filed and is pending.
Subsequent Resales or Mortgage Transactions
The FNTG family of companies will continue to insure subsequent resale or mortgage
transactions where the grantor or mortgagor was a purchaser of REO property, as long as
at the time of the present transaction there are no known or pending claims against the
property or the prior policy, and it is insured by an owner’s policy issued by an FNTG
company or issued by an acceptable non-family major insurer. (The title examiner should
check the docket sheet of the underlying foreclosure file to make sure that no motion to set
aside, motion for rehearing, or appeal of the foreclosure has been filed.)
If you have questions, you may contact an underwriter by calling 800-669-7450 or 800-
432-2236. INDEMNITY AGREEMENT
This INDEMNITY AGREEMENT (hereinafter "Agreement") made and entered into as of the _____day of
___________________, 20____, by and between [LENDER/SERVICER]___________________________________
hereinafter "Indemnitor"), and _______________________________________(Title Insurer, hereinafter "Company").
W I T N E S S E T H:
WHEREAS, Company has been asked to issue its commitment, title insurance policy or policies (collectively
hereinafter “Policy”) insuring against loss or damage to the named insured or insureds under the Policy (collectively
hereinafter “Insured”) by reason of defects, liens or encumbrances in the title to property described as follows
(hereinafter "Property"):
WHEREAS, Company is aware of general allegations or concerns regarding the processes or procedures utilized by
or on behalf of Indemnitor which could lead to potential claims of damages, challenges to title to the Property being
other than as insured in the Policy or challenges to the priority of the lien insured under the Policy (hereinafter "Title
Matter") as set forth below:
A claim by the former owner or other person(s) with a current or past interest in the Property challenging the validity
of or right to conduct the underlying foreclosure sale and/or determination by a court of competent jurisdiction that the
underlying foreclosure action in the chain of title to the Property is invalid by reason of the submission of incompetent
or erroneous affidavit testimony or documentation prepared in connection with the underlying foreclosure action and
related proceedings..
WHEREAS, Indemnitor has reviewed all documentation, procedures, and/or notices related to the foreclosure of the
Property and related proceedings and represents that the same comply with applicable state, federal and local law
and practice:
WHEREAS, Indemnitor desires that Company issue its Policy without exception to or providing affirmative coverage
for the Title Matter; and
WHEREAS, Company is willing to issue its Policy without exception to or providing affirmative coverage for the Title
Matter only if indemnified as herein set forth.
NOW, THEREFORE, for and in consideration of the issuance of said Policy and other good and valuable
consideration, the receipt of which is hereby acknowledged, Indemnitor does hereby agree with Company as follows:
1. Indemnitor agrees to defend Company, at Indemnitor's own cost and expense on behalf of and for the protection of
Company (but without prejudice to the right of Company to defend at the expense of Indemnitor if Company so
elects), any and every suit, action or proceeding in which the Title Matter is asserted, established or enforced in, to,
upon, against or in respect to the Property, or any part thereof, or interest therein (“Action”).
2. Indemnitor agrees to indemnify and hold Company harmless of and from any and all liability, loss, costs, damage
and expense of every kind, which Company shall incur or become liable for as a result of the Title Matter, directly or
indirectly, including but not limited to costs, attorneys’ fees and expenses incurred by Company, diminution in value,
unmarketability of title, displacement of lien priority, failure of title and actions to enforce this Agreement.
3. Company will notify Indemnitor in the event Company receives written notice of a Title Matter or Action and failure
to do so will relieve Indemnitor of its obligations to the extent Indemnitor establishes that it has been prejudiced by
such failure. Indemnitor will cooperate with Company, at Indemnitor’s expense, in the defense or settlement of the
Title Matter or Action.
4. Each and every provision of this Agreement shall extend to and be in force concerning any and every other Policy
Company may at any time or times hereafter issue insuring without exception to and providing affirmative coverage
for the Title Matter subject to the applicable limitations period set forth in paragraph 8 below.
5. Without waiving any other rights and remedies it may have under the Policy or otherwise, Company agrees that its
sole and exclusive remedy for a Title Matter is with the Indemnitor pursuant to this Agreement and Company
specifically waives any rights of subrogation or remedy for breach of warranty against the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation arising from a Title Matter.
6. This Agreement contains the entire agreement of the parties concerning the subject matter thereof and there are
no representations, inducements, or other provisions other than those expressed here in writing. All changes,
additions or deletions hereto must be in writing and signed by all parties.
7. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. It is made
to induce the issuance of a Policy relating to the purchase of and/or an acceptance of a security interest in the
Property described herein. Indemnitor acknowledges that Company is relying upon the representations and
indemnifications contained herein in issuance of said Policy. The provisions of this Agreement shall survive the
disbursement of funds and closing of the transaction wherein the Policy is issued and shall be binding upon
Indemnitor, its/their successors and/or assigns.
8. Company and Indemnitor agree that this Agreement will automatically expire upon the determination of a court of
competent jurisdiction that the underlying foreclosure action is valid and enforceable or a cloud on title created by the
underlying foreclosure action is otherwise removed.
__________________________________
(Type name of Lender/Servicer)
By:________________________________
(Signature)
__________________________________
(Print Name of signer)
STATE OF ________________________
COUNTY OF ______________________
I hereby certify that on this ____ day of _________________________, 20_____, before me, a Notary
Public, appeared __________________________ as ______________ of ________________________________,
who is personally known to me or who produced the following identification: _______________________________.
__________________________________
Notary Public


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