Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.
Sunday, July 08, 2012
Title Insurers Red-Flag Homes w/ Quiet Title Suits In Ownership History; Add'l Scrutiny Required As One R/E Operator Peddles Mortgage Elimination Plan
In West Palm Beach, Florida, The Palm Beach Post reports:
Alerts issued by two of Florida’s largest title insurers are drawing scrutiny to a complex bank bypass tactic that dozens of Palm Beach County homeowners are attempting by signing their deeds over to the Fidelity Land Trust Co.
Old Republic National Title Insurance, which carries the largest share of Florida’s market at 30 percent, according to the Florida Land Title Association, first circulated its warning in November. It requires additional review for new policies on homes with a so-called “quiet-title” action in their history.
An April 19 alert from the Jacksonville-based Fidelity National Title Group, identifies the land trust by name, saying agents are not to close or process transactions from the company without written authorization from underwriters.
Title insurance protects homeowners and lenders against financial loss from defects in the title, liens, or if someone tries to challenge ownership. Most banks will not approve loans without title insurance. Fidelity National Title Group, which carries 10 percent of Florida’s title insurance market, has no relation to the Fort Lauderdale-based Fidelity Land Trust Co.
The Palm Beach Post first wrote about the trust last month after it had quietly amassed more than 150 deeds in Palm Beach, Broward and Miami-Dade counties since it registered as a limited liability company in December. The land trust is heavily soliciting South Florida’s underwater homeowners through several marketing firms including the North Palm Beach-based Lincoln Property Consultants, previously called Lincoln Financial Group.
Under the land trust’s plan, homeowners sign their deed into a trust, with themselves as beneficiary, while also signing a contract to pay the trust an up-front fee of thousands of dollars. The trust then sues the homeowner’s lender claiming flawed or fraudulent loan practices in an attempt to cancel the mortgage and get a quiet title judgment naming the trust as owner.
At this point, the homeowner still owes the mortgage debt, or note, but because it is no longer secured by the home, the idea is the lender will be more willing to sell the debt for pennies on the dollar to the trust.
Some attorneys say what the trust is doing is an unproven tactic that relies on the banks not responding to the lawsuit within a 20-day period, which can result in a default judgment in favor of the trust. Default judgments are routinely overturned if the defendant can show good cause as to why they didn’t respond.
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[T]itle insurance experts said the warnings from Old Republic and Fidelity National Title Group are red flags. Getting clear title on a property where the mortgage was canceled without a full trial may be difficult, they say. Neither title company returned phone calls for this story.
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Marlyn Wiener, a real estate attorney with an office in Boca Raton, said title insurers fear they will have to pay off a reinstated mortgage if the cancellation is overturned. “If a mortgage was extinguished through a full trial of the quiet title action and court order after a judge heard all of the arguments, I imagine that the underwriters would approve issuance of new policies,” she said.
“What we have, ironically, is a quiet title action, which is supposed to clean up title issues, having the potential to cloud the title and create more issues.”
CBC News: Betrayal of Trust (A CBC investigation reveals how lawyers across Canada have misappropriated and mishandled clients money, to the tune of tens of millions of dollars, or sometimes even charging vulnerable people top dollar for shoddy services)
Land Contract/Contract For Deed/Rent-To-Own Rackets
The New York Times: The Housing Trap (In the wake of the housing crisis, low-income families have turned to seller financing to buy homes but these deals can be a money trap)
Beware The Fine Print: Consumers Forced To Sign Away Their Rights To Use Court System
The NY Times: Arbitration Everywhere, Stacking the Deck of Justice(Part 1 in series examining how clauses buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court)
Foreclosure Mills' Abysmal Record In Complying With New NYS Foreclosure Requirements
Justice Deceived: How Large Foreclosure Firms Subvert State Regulations Protecting Homeowners
MFY Legal Services Report On Questionable Practices By Process Servers In Debt Collection Cases
Justice Disserved: A Preliminary Analysis of the Exceptionally
Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York
Mortgage Mess Redux: Robo-Signers Return (A Reuters investigation finds that many banks are still employing the controversial foreclosure practices that sparked a major outcry last year)
CNN Video: As Foreclosures Mount, Florida Court Turns To 'Rocket Docket'
The Wall Street Journal: A Florida Court's 'Rocket Docket' Blasts Through Foreclosure Cases (2 Questions, 15 Seconds, 45 Days to Get Out; 'What's to Talk About?' Says a Judge)
"Produce The Note" Strategy When Dealing With Missing Promissory Notes In Foreclosure Actions
ABC Video: Fighting Against Foreclosure (Some homeowners have found a new tactic to keep the banks at bay)
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