Mortgaged homeowners using Old Republic Title are starting to receive notices which state: The Company will not insure title to any property which has been foreclosed by Ally Financial, Ally Bank or GMAC until further notice.
The title companies are now very much aware (as some of us legal eagles have discovered behind the scenes), of their exposure to the frauds committed by the lenders and their foreclosure mill attorneys in the process of foreclosing on borrowers who they claim are in default. At issue are the affidavits and assignments that claim proof of ownership of the note on the part of the foreclosing lender.
Attorney depositions from an Ally Financial employee, Jeffrey Stephan, show that Stephan admitted signing these types of documents without having first-hand knowledge of their contents. Stephan is alleged to have signed thousands of these documents. There are also alleged violations of notarization procedure also coming to light, wherein the persons notarizing these assignments and affidavits were not present at the time of signature. These procedures not only bring fraud on the court but also give rise to wrongful foreclosure actions by ejected homeowners.
The other side of the equation involves the new buyer of the foreclosed home. The fraudulent mess left in the wake of the foreclosure action clouded the new buyerís title; thus making the old buyer and everyone else associated with slandering the title to the foreclosed property liable to the new buyer.
And who pays those damages? The title company of course! And they don’t want to.
Everyone down the chain of title is involved, says Seattle attorney Matthew Hale. If the documents were improperly attested to, then the trustee that foreclosed on the homeowner acted outside of his legal capacity and is liable to both the old homeowner for wrongful foreclosure and to the new buyer for issuing him a faulty Trustee’s Deed. This is probably the biggest problem with buying foreclosures.