Title Insurer Extends Policy-Writing Suspension To JP Morgan Chase Foreclosures

The New York Times reports:

• A major title insurance company has stopped insuring homes foreclosed by JPMorgan Chase, another sign that the controversy over the legal practices of the big lenders is starting to influence the housing market.

• The company, Old Republic National Title Insurance, told its agents Friday that it would not write policies on foreclosed Chase properties until “the objectionable issues have been resolved,” according to a memorandum sent out by the firm’s underwriting department.(1)

• A Chase spokesman declined to comment. Old Republic executives did not return calls for comment. The title insurer, which is based in Minneapolis, said earlier in the week that it would not write policies for properties that had been foreclosed by another big lender, GMAC Mortgage.

For more, see Company Stops Insuring Titles in Chase Foreclosures.

See also, USA Today: Old Republic to stop writing policies for some foreclosures:

• [M]aryln Weiner, a title agent and real estate lawyer in Boca Raton, Fla., said she received a bulletin saying that Old Republic would also not insure title policy to a purchaser who has bought a property from Chase when the bank has foreclosed on the home and are now selling it to third parties.

• "They won't insure it after completion after the foreclosure," Weiner says. "This is going to set us back years. It's really going to be a mess. I think you're going to see actions to reopen foreclosures that already took place. This will have tremendous consequences and all title companies will do the same thing. We've never seen anything like this before."

(1) It seems to me that the underwriting department should also be concerned with the mortgages purportedly held by Chase, GMAC, etc. on those homes that are not in foreclosure as well. It stands to reason that if these companies can't prove that they own the loans that are in foreclosure, they probably can't prove that they own the loans they purportedly hold that aren't in foreclosure, either. Should a non-delinquent borrower decide to sell his/her home in a standard, conventional transaction (or any borrower for that matter, delinquent or not, who is trying to unload the home in a short sale), who does the title/closing agent look to for the satisfaction of mortgage when paying off the home seller's existing loan??? (If the purported existing mortgage lender can't prove that it owns the loan they claim to hold, they certainly have no authority to sign the satisfaction of mortgage.)

In theory, at least, it seems that the entire residential real estate sales industry, in my view, should be coming to a grinding halt by the end of the month.