Florida Homes Title Insurance and Foreclosures.
Initially, the bru-ha-ha over the controversial robo-signing stifled title insurance for most foreclosed properties. However, this was focused towards properties held by the most well-known lenders such as JP Morgan Chase, Bank of America, etc.
In hindsight, can you blame title companies for putting a halt to insuring properties that may have been illegally foreclosed upon? As a result of this rampant fraud, one of the nation’s largest title insurers, Old Republic International Corporation, will no longer provide title insurance for any Chase foreclosed properties until their documentation issues get resolved.
Most title companies are resuming insuring foreclosed properties but with an eagle eye; assessors are scrutinizing foreclosure titles with a fine tooth comb and are being especially diligent in examining and certifying those titles. Buyers should be prepared for delays.
With the overwhelming inventory of foreclosures across the country, many buyers have been afforded the opportunity to buy homes for cash. That’s right — $50,000, $100,000 and $150,000 could make for a nice fixer upper but foreclosed homes purchased with cash do not require title insurance at closing.
However, this is very risky; if someone disputed your title ownership, you’d be responsible for the hefty costs of legal expenses to fight the claim.
Now, it may be challenging to purchase title insurance because the title insurer may find that foreclosed properties are currently more risky to insure but it is well worth it!
Why is Title Insurance so Important and how can it protect you?
Title insurance protects the buyer from a myriad of things. Old loans, forged deeds and unpaid liens are just a few of the things title insurance protects you from.
Title insurance companies are responsible for tracking every recorded event surrounding a property starting with the current title holder. From there, information is gathered on every previous title holder. If a questionable event is discovered, the company is required to do everything within its power to prevent, or eliminate, any risks or losses that may affect your ownership status. Without insurance, a situation like an existing unpaid mortgage or judgment on the property would require you to pay off the debt.
The overall benefit provided by title insurance is it takes into account the likelihood that recording errors may exist within the history of a property. It protects the buyer from taking the fall should an unknown event come to light after ownership is transferred.