What would happen if people who had lost homes to foreclosure persuaded a judge to overturn it?

[1776Forever]

The New York Times: Your Money
After Foreclosure, a Focus on Title Insurance
By RON LIEBER
Published: October 8, 2010

http://www.nytimes.com/2010/10/09/your-money/mortgages/09money.html

When home buyers and people refinancing their mortgages first see the itemized estimate for all the closing costs and fees, the largest number is often for title insurance.

This moment is often profoundly irritating, mysterious and rushed — just like so much of the home-buying process. Lenders require buyers to have title insurance, but buyers are often not sure who picked the insurance company. And the buyers are so exhausted by the gauntlet they’ve already run that they’re not interested in spending any time learning more about the policies and shopping around for a better one.

Besides, does anyone actually know people who have had to collect on title insurance? It ultimately feels like a tax — an extortionate one at that — and not a protective measure.

But all of the sudden, the importance of title insurance is becoming crystal-clear. In recent weeks, big lenders like GMAC Mortgage, JPMorgan Chase and Bank of America have halted many or all of their foreclosure proceedings in the wake of allegations of sloppiness, shortcuts or worse. And a potential nightmare situation has emerged that has spooked not only homeowners but lawyers, title insurance companies and their investors.

What would happen if scores of people who had lost their homes to foreclosure somehow persuaded a judge to overturn the proceedings? Could they somehow win back the rights to their homes, free and clear of any mortgage? But they may not be able to simply move back into their home at that point. Banks, after all, have turned around and sold some of those foreclosed homes to nice young families reaching out for a bit of the American dream. Would they simply be put out on the street? And then what?

The answer to that last question may depend on whether those new homeowners have title insurance, because people who buy a home without a mortgage can choose to go without a policy.

Title insurance covers you in case people turn up months or years after you buy your home saying that they, in fact, are the rightful owners of the house or the land, or at least had a stake in the transaction. (The insurance may cover you in other instances as well, relating to easements and other matters, but we’ll leave those aside for now.)

(read more at the link)

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Something for all who have lost their homes to foreclosure to keep vigilant about!:headbang:

[MineralMan]

1. At least in Minnesota and California, buyers have an absolute right to select the

title insurance company and title services company who handles the sale. It is strictly the buyer's choice. The problem is that real estate agents have their own favorites, and most buyers just go along. Now, I'm not accusing anyone of anything, but it's a good idea for the buyer to do a little research, call a few title companies, and see who they want to handle the escrow and title stuff.

Almost nobody does that, however. I just did all the content for a title services company here in Minnesota, and had to do a lot of research to write it. I learned a lot. There aren't that many title insurance companies out there, but there sure are a lot of companies who sell title insurance and handle the title search, etc. Choosing the right one can make a big difference in your transaction.

[1776Forever]

2. Good reply - I agree totally that most of us just aren't informed on these issues! n/t