Tuesday, June 19, 2012

Insurance Underwriter Sues Title Agent Over Refinancing Screw-Up Where Borrowers Didn't Own The Home Insured

In Madison County, Illinois, The Madison Record reports:

  • A title company claims another company caused it to grant insurance to a couple who did not really own the home they had attempted to refinance.

  • First American Title Insurance Company claims American Equity Mortgage refinanced a home at 2158 Hamilton in Granite City to Thomas and Elaine Doak for $75,000. Before the refinance went through, defendant Nations Title Agency of Missouri conducted a title search to ensure that the Doaks owned the property, according to the complaint filed May 25 in Madison County Circuit Court.

  • Nations Title represented to American Equity that the Doaks owned a fee simple interest in the property, thereby clearing the way for a refinance. However, had Nations Title performed proper research it would have learned that the Doaks hold only a life estate interest in the property. In other words, the Doaks owned the property only until they died, the suit states.

  • The Doaks had gained the property through Margaret Doak, who left her home to them in her will. After Thomas and Elaine Doak died, the property was then to be transferred to Margaret Doak's descendants, the complaint says.

  • After receiving clearance from Nations Title, American Equity granted the refinance to the Doaks and Nations issued an insurance policy through First American, which insured the mortgage company from loss due to title disputes, the complaint says.

  • Following the refinancing, Margaret Doak's descendants filed a lawsuit to quiet the title to the property, which would cause the bank to foreclose on the property, First American claims.

  • First American settled a claim in relation to the dispute and purchased the mortgage for $68,757.90, according to the complaint. It then proceeded with foreclosure of the property and incurred attorneys' fees of $15,309.97, the suit states.

  • Since then, First American sold the property for $14,637.20, the complaint says. First American claims it lost tens of thousands of dollars in the ordeal.

  • It sought repayment of the money from Nations Title because the company promised to indemnify First American from any losses. However, Nations Title refused to pay the amount, according to the complaint. "First American's losses prior to this litigation totaling $54,430.67," the suit states.

  • First American is seeking a judgment of more than $50,000, plus pre-judgment interest, attorney's fees, court costs and other relief the court deems just.

No comments: