It was almost one year ago when the nation’s third largest title company filed for bankruptcy protection. Stay tuned and hold onto your hats because many more will be filing for bankruptcy protection, a development that will have grave consequences for the larger housing and financial market.
Title insurance insures that when you purchase a home or when a lender puts a mortgage on the home, there are no competing interests that would impair or threaten that ownership or mortgage. Most folks bought their homes and most lenders extended mortgages without thinking much about this insurance or the stability of the title insurance underwriters who were issuing these policies.
THE COMING CRASH
The housing and financial markets crashed for a variety of complex and interrelated reasons, but greed, incompetence and reckless institutional and government policies were the general reasons for the totally avoidable debacle that continues to unfold. These same factors will lead to the eventual crash of the title insurance market that continues to operate. In the good times, underwriters were writing “clean” policies on homes with relatively simple title problems and issues. Since the crash of the housing market, title insurers are not writing “clean” policies, they’re writing policies over homes with a myriad of complex and difficult to fix problems. The lenders who are filing foreclosure are ignoring major title problems in their rush to file foreclosure cases and the insurers are allowing these practices to continue. I can only speculate that they’re just more interested in taking in premium dollars in the short run than in protecting themselves from the dire consequences that will follow in the long run.
WHO CARES AND WHY?
When the major title insurers collapse the entire housing and lending market will seize up and crash because purchasers will have no confidence in their ability to actually own the property they want to purchase and lenders won’t lend on property if they cannot insure that they have a good mortgage on the property. The regulators and government officials are both ignoring the problem and frankly just don’t understand the problem and the consequences. The judges who are hearing foreclosure cases are now complicit in the problem because they’re looking the other way when they grant foreclosure knowing full well that the system is in crisis. After all we’ve learned over the last several years its just amazing that this continues…..
Remember this article and the date it was written….when the crash comes later, I’ll just sit back and say….”Told Ya So!”