Many homebuyers, eager to reduce their expenses during the purchase process, question the need for purchasing owner’s title insurance. After all, the bank’s attorney has already researched the title for the bank, how much risk could there be? However, the recent allegations that the country’s major mortgage lenders improperly processed foreclosure documents, and in some cases, actually forged signatures or made false statements, have demonstrated the value of title insurance.
The foreclosure issue is just one of many potential scenarios which consumers and attorneys cannot identify in advance, and the problem should serve as an incentive for homebuyers to ALWAYS purchase owner’s title insurance. The few hundred dollars spent may not only save thousands in future legal costs, but just might save the buyer’s home.
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John,
When I hear that fraud will be an exception for title insurance coverage liability, it makes me want to avoid foreclosed homes until this blows over.
John, I've never bought a home without title insurance. Even when I was 19 buying my first home and watching every penny the money saved at the closing could not replace my peace of mind.
Mike - Many will avoid foreclosures and some title companies are refusing to insure them.
Cynthia - I've always purchased title insurance; it's very inexpensive protection.
Will the Title companies be burdened with legal costs due to the impending lawsuits?
Jon - It has been projected by some that title companies could be ruined by this. I'm not yet certain it will get that dire, but it could if the lawyers try to turn it into a "cash cow." (I can see the nighttime TV ads now: "Lost your home to foreclosure? You may be able to receive compensation. Call the offices of Dewey, Cheatham, and Howe)
John Is it possible to issue just a mortgagee's title policy without an owners policy? I have not ever seen it done. Here the motgagee's policy piggybacks off of the owners policy and is a fraction of the cost of the owners.. confused.
Trey - In GA we can "piggyback," but it's not a requirement. The purchaser must agree to purchase the policy.
But they don't forget the REQUIREMENT that title insurance be purchased to protect the bank!
Jay - The bank will ALWAYS be protected; that's how they get to have all the money. (And the sad part is: if they screw up and lose, we have to make them whole)
Hi John, Title Insurance is key. I am with Cynthia, would never do without...
Barbara - That's the best choice.
John,
Now more than ever it is mandatory to have owner's title insurance. Don't make a purchase without it.
Esko - I agree.