Title insurance and protecting yourself in a foreclosure purchase

By | February 7, 2011

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Protecting your investment being purchased within the foreclosure crisis maze

As we discussed through the example we gave in the article on Saturday of a denied title policy, it is critical for buyers of foreclosed property to be absolutely certain that they are getting good, clean title and that they buy an owner’s policy.

This goes for an REO or a property purchased through an auction.

There are too many questions swirling around this sector of the market to do otherwise. Equally as important is that the buyers attorney, or the buyers themselves if they are arranging the title insurance, is sure that the title company being used is current and knowledgeable on any new court decisions that may affect them now or in the future.

This is our Example #2 of a transaction that we denied to issue a title policy on.

Example # 2- Non-insurable Title

Indymac Federal Bank gives a mortgage to Mrs. Orange and records the mortgage in MERS as “nominee”.

Mrs. Orange stops making payments on her mortgage and Indymac starts an action to foreclose on August 12, 2008

MERS assigns the mortgage back to Indymac (see attached).

Indymac proceeds with the foreclosure and gets the property back via a referee’s deed.


Although Indymac got an assignment of the mortgage, the assignment was signed and notarized on August 15, 2008. Even though there is language in the assignment stating that the assignment was “as of August 11, 2008”, the title company will not insure this title without an indemnification from the bank.

Hallmark Abstract Service of New York is always available for interviews on the subject of title insurance and the foreclosure crisis.

For information please contact Michael Haltman at mhaltman@hallmarkabstractllc.com or call him at 516.741.4723.

Hallmark Abstract Service: Have you ever been to a closing where the title wasn’t cleared? We haven’t!

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