Three major title insurance companies – First American Financial, Old Republic International and Stewart Information Services – told Wall Street analysts in conference calls Thursday that they had decided not to demand written indemnifications from lenders re-selling foreclosed homes. Combined, the three companies account for 52 percent of the title insurance market.
“Decided”? Uh, no. Here’s the truth, in the same article:
“It’s our understanding that in the marketplace, some servicers have indicated under no circumstances will they provide an indemnification,” Gilmore said.
Why would you not provide an indemnity agreement if you know your processes are ok?
Remember, the banks have said that all the chain of title issues and their foreclosure process is substantively ok, and contains only “procedural errors.”
My response: Nobody is bothered providing an indemnity against something that carries no actual risk.
When I negotiated the sale of MCSNet there were various representations and warranties (“indemnities”) that were provided to the purchasing firm related to the veracity of what I had provided to them during their diligence process, most-particularly the state of the firm’s finances (e.g. cash, receivables, payables and debts, etc.) Why would I refuse to provide an indemnity on that material unless I know I’m lying?
My conclusion: The servicers – the big banks – are lying and the chain of title on all these properties is severely damaged and might be completely trashed.
Govern yourself accordingly.