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Title Insurers Concerns Over Processing Methods Could Derail Foreclosure Market Recovery
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Posted On :
Feb-07-2012
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Article Word Count :
710
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Title insurance companies are raising concerns and seeking indemnification from the potential fallout from the ongoing investigation into lending practices and loan document processing. Unless their concerns are addressed, the entire housing market could be affected.
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In the wake of the biggest downturn in the U.S. housing market in generations, many firms whose businesses rely on the
housing sector of the economy are trying to remain one step ahead of the avalanche and trying to ease the pain should they
find themselves under the pile. The title insurance industry is one of these business entities and their attempts to shield
themselves from the fallout from mortgage foreclosures could make or break many of these companies.
According to many experts in the field, title insurance companies are taking every step to ensure that bank lenders and
mortgage companies are taking full responsibility for whatever foreclosure processing messes might be uncovered in the on-
going nationwide probe of the housing market and specifically that title insurance industry will be indemnified from any
potential fallout that might follow from poor processing methods by the lenders. Industry watchers say that title insurance
firms are demanding that banks warrant that title firms have conducted all procedures legally in relation to handling
foreclosed cases.
Experts believe that the issue of questionable processing practices in the foreclosure market will have a big effect on the
title insurance industry. These firms play a major role in foreclosed property transactions since it is the title insurance
company that guarantees that the title for the property is free and clear of any liens and that there are no missing
documents. Without this guarantee the homeowner has little or no ability to resell this property at a later date and
therefore is unlikely to enter into the transaction.
A situation in the housing market in The District of Columbia highlights the problems being faces by foreclosures and the
title insurance industry’s role in moving these transactions along. A D.C. effort to help distressed homeowners now threatens
to bring to a halt the sale of foreclosed properties in the city, depress home prices and cast the local housing market into
greater uncertainty.
Recently, the District of Columbia implemented regulations requiring lenders to enter into mediation with a homeowner before
foreclosing on a home. But now, two large title insurers, which have up to 80% of the D.C market share, have stopped insuring
the sale of foreclosed properties, saying the law makes it too risky. Without title insurance, obtaining a home is next to
impossible. The policies provided by the title insurance company protects mortgage lenders from challenges to the title of a
property. The problems could move beyond the foreclosure market to all home sales if lenders decide that any D.C. home that
could potentially fall into delinquency would face a similar problem down the road. When these foreclosed properties linger
on the market, unable to be sold, they are a huge drag on overall neighborhood prices.
Steps taken to reduce the number of foreclosures taken by the Obama Administration in 2009 have not worked out entirely as
planned. It was hoped that the program known as the Home Affordable Modification Program, or HAMP would address the
foreclosure problem. HAMP was designed to enable borrowers that meet eligibility requirements to avoid foreclosure by
modifying loans to a level that is affordable for borrower and sustainable for the long term. The program was also designed
to provide clear and consistent loan modification guidelines that the entire mortgage industry can use. It includes
incentives for borrowers, loan servicers, and investors. However, HAMP has been riddled with problems, especially poor
performance by loan services in getting mortgage payments reduced for those who are qualified. Many also feel that HAMP lacks
a full commitment by the government.
With the title insurance industry playing such a vital role in removing the glut of foreclosed homes from the market, their
interests in steering clear from collateral damage from poor processing methods will no doubt be a major concern to everyone
involved in this dilemma.
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Article Source :
http://www.articleseen.com/Article_Title Insurers Concerns Over Processing Methods Could Derail Foreclosure Market Recovery_145106.aspx
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Author Resource :
To know more about Title Insurance New York please browse Title Insurance New York
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Keywords :
Title Insurance New York, New York Title Insurance Residential, New York Title Insurance Commercial,
Category :
Business
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Business
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