CATIC, the largest domestic and only bar-related title insurance underwriter in New England, will continue to insure bank-owned properties despite recent admissions of problems with affidavits in thousands of foreclosure cases by several major lenders.
Richard Patterson, president and chief executive officer of Rocky Hill, Conn.-based CATIC, said the group has been working with the American Land Title Association and other interested parties to come up with a solution, but that "for the time being we are going to continue to insure the transactions."
CATIC also has offices in Holyoke and Wellesley.
It was reported on Friday that Old Republic, a national title insurer, has stopped insuring JP Morgan Chase and Bank of America REO transactions due to clouds on the title caused by the faulty filings. The flawed affidavits submitted in the cases could create additional grounds for foreclosure defense attorneys to sue lenders, arguing that the original foreclosure was illegal. A group of foreclosed homeowners in Maine has filed a class action lawsuit against GMAC/Ally alleging widespread fraud in the company’s filings.
If a foreclosed homeowner were to prevail in such a suit, it is unclear what the consequences would be if the property has since been sold to a new owner. However, Patterson said that there are "a number of defenses that could be asserted if someone were to challenge a purchase out of a foreclosure, and we think it’s an acceptable practice to continue to insure."
He called on the various industries potentially affected to come together to address the issue.
"Part of it will be based on whether we can get some cooperation from our friends in the lending community, to come to some sort of universal approach to addressing this issue, because it affects everybody, it affects the lending community, the real estate sales community, it affects the title community, it affects the attorney community," Patterson said. "So we want to try and get this to a place where everybody’s co-operating together to allow the transactions to move ahead smoothly."
