Foreclosures have occurred in staggering numbers. Title Companies have been inundated with claims, related to improper foreclosures. Below are the new guidelines, for insuring properties, coming out of foreclosure.
Subject:
Georgia Agents of First American Title Insurance Company Underwriting Department November 18, 2010 GA‐139
Update on Underwriting Guidelines for Foreclosed Property Transactions
First American appreciates our title agents’ efforts addressing the recently publicized allegations of procedural irregularities in foreclosures. This bulletin supplements and clarifies First American’s previous bulletins regarding the issuance of title insurance following a foreclosure and is a restatement of First American’s existing practices relating to transactions wherein we are insuring a purchaser at a foreclosure sale or a sale by a lender (or its affiliate) that has acquired title through foreclosure.
As a result of the foreclosure suspensions announced by several large lenders over the last several weeks, the Company recently reviewed its underwriting guidelines on a national basis for policies issued to purchasers of real estate owned (REO) properties and their lenders.
The company supplemented its underwriting guidelines after this review to require, before agreeing to insure, a more detailed risk assessment of transactions involving REO properties and to require escalated approvals if that assessment identifies any potential issues. General guidelines were issued on October 22, 2010 as Georgia Bulletin GA‐138. A sample risk Questionnaire was included as a part of the Georgia Bulletin.
Because Georgia is a Non‐Judicial Foreclosure State in most cases, many of the foreclosure practices reported about in the National Press do not apply to the procedures followed under Georgia laws.
Please be advised that the sample risk Questionnaire will not be required to be submitted to the Georgia Agency Office for prior approval in insuring REO sales. The Questionnaire may be used as a checklist in our own underwriting review, however, and may be kept in the Agents file.
As required by our usual and customary underwriting guidelines for issuing policies after foreclosure , we recommend that any evaluation of a sale of an REO property after a foreclosure or insurance of a third party purchaser under a Deed‐under‐Power of Sale include an evaluation of the following factors:1. Examine the foreclosure process for compliance with Georgia law governing foreclosures, e.g. compliance with notice provisions, the terms of the security instrument, and statutes governing advertisements and conduct of foreclosure sales. (Note that OCGA 44‐14‐162.4 provides protections to subsequent purchasers, based on recitals in the Deeds‐under‐Power. The Deed‐under‐Power recitals may be relied upon).
2. Verify that there is no pending litigation in which the validity of the foreclosure is or may be questioned, including a suit to confirm the sale, and that the time for filing such a suit has expired.
3. Verify that there are no parties in possession. 4. Verify that a clear chain of Assignments of the security instrument (Security Deed) are
filed, as required by OCGA 44‐14‐162 (b) prior to the actual foreclosure sale. 5. Verify that the execution of the Assignments is apparently proper. 6. Verify that proper notice of sale was provided to the Internal Revenue Service if Tax
Liens exist.
If you have any questions, or need help with your insurance needs, please do not hesitate to contact Paxin Closing and Escrow, LLC, at 866-752-4445
