Foreclosure Mess Takes A Turn For The Worse. Title insurance is no longer issued on Washington DC Foreclosures of formerly owner occupied properties! What? A client of mine attempted to go to settlement yesterday on a foreclosed Washington DC property. Getting the loan through was difficult due to dealing with the bank and the delays, confusion and difficulties they caused. But then the client was told at the settlement table that First American and Fidelity Title Insurance have suspended issuing title insurance on Washington DC properties as a result of actions taken by the Washington DC Attorney General last week. We were told that this ban applies to residential properties only and only those which had formerly been owner occupied.
My client had given notice on their rental apartment, and movers were due to move them into the new home today! My client has 5 days remaining in their current apartment. What is next for them?!
This attorney general in Washington DC, as in many states across the country, is taking a hard look at the latest foreclosure mess and how banks are processing foreclosures. The attorney general can bring enforcement action under the Consumer Protection Procedures Act to enjoin foreclosure proceedings, secure restitution for “injured” homeowners, and seek appropriate civil penalties.
As you can imagine, this kind of talk leaves a title insurer cold as to insuring this type of transaction, and as cited above, several large title insurers have stopped insuring these transactions, which does not allow them to go to settlement since no lender will allow a loan without title insurance.
Which state is next to make these threats? Which title insurer is next to stop insuring these transactions? Do people who don’t make their payments deserve any kind of defense against “robo-signing” and other seemingly procedural errors? Do banks deserve this because they are evil? Are the attorney generals across the country a bunch of ambulance chasers?
There are a lot of questions around this issue. All I know is that a young, first time home buyer has no place to live, has paid money for home inspections and an appraisal, and poured many hours of work into trying to make a new home. The biggest violation is the last minute surprise at the settlement table that causes cost, pain and heartache.
Do your own due-diligence and please get the word out to friends who may be buying a foreclosure (in Washington DC or any area), to Realtors, and the public in general about this problem so that other home buyers are not left in the same bind.