Fidelity National to task banks over foreclosure warranty

By Agency Reporter

Thursday, 21 Oct 2010

Fidelity National Financial Incorporated, the largest United States title insurer by market share, will require lenders to sign a warranty assuring their paperwork is sound before backing sales of foreclosed homes.

An indemnity covering ”incompetent or erroneous affidavit testimony or documentation” must be signed for all foreclosure sales closing on or after November 1, the Jacksonville, Florida- based company said in a memorandum to employees on Wednesday.

The agreement was prepared in consultation with the American Land Title Association and mortgage finance companies, Fannie Mae and Freddie Mac, Fidelity National said.

”It‘s just the prudent thing to do,” Executive Vice- President and Chief Legal Officer for Fidelity National, Mr. Peter Sadowski, said in an interview, adding, ”It is important for the servicers and the lenders to represent to us and to the people we are going to be insuring that there are no problems.”

Bank of America Corporation, the biggest US lender, agreed to a similar contract with Fidelity National on October 8, the same day it extended a freeze on foreclosures to all states amid concern by federal and state officials that lenders were seizing homes without properly reviewing documents, Bloomberg reported on Wednesday.

The bank plans to start resubmitting foreclosure affidavits next week. Attorneys general across the country have opened a joint investigation into foreclosures, saying they will seek an immediate halt to any improper practices at mortgage lenders and loan servicers.

Fidelity National shares dropped by 7.8 per cent this month through Tuesday amid concern that foreclosure mistakes may allow former owners to challenge the repossession of their homes. Shares of Santa Ana, California-based First American Financial Corporation, the number two insurer, fell by three per cent.

 Source: Punch



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