Massive Mortgage Mess Update: Title Companies Stop Insuring Foreclosed Properties
From the NYT:
As more defaulting homeowners become aware of the lenders’ problems, they are expected to hire lawyers and challenge the proceedings against them. And if completed foreclosures were not properly done, families who bought the troubled homes could be vulnerable to claims by the former owners.
Apparently alarmed about such a possibility, one of the major title insurance companies, Old Republic National Title, has sent a bulletin to agents saying that “until further notice” it would not insure title to properties foreclosed upon by GMAC Mortgage, the country’s fourth-largest home lender and one of the two big lenders at the center of the current controversy.
GMAC declined to comment, and Old Republic representatives did not return calls.
As we have long expected, this merely means that as the foreclosure pipeline gets clogged beyond repair, and as mortgage losses accumulate at an exponentially growing pace, stocks of financial companies will likely surge as very soon their survival will become a binary bet on TARP 2. Very soon the investing public will realize that they are worth either nothing or infinity, which is what we affectionately call the Fed's price target for the US financial sector.
h/t Keith
Oct 1, 2010