query: title insurance claim

I received this query as an e-mail:

"I have several title companies where I have a 2^nd mortgage against, and they are refinancing people, even now, and somehow not seeing we are recorded and on title. I am trying to avoid litigation and want to know the best way to attack it. Many of them are reluctant to pay, even when a settlement has been offered. Proof is shown of recording and they still play around. Is there a law that governs them, especially now with all of the mortgage fraud going around?

One more but it is one of a kind:

I have a customer who sold her property; she had a 2^nd recorded mortgage on it. The 2^nd mortgage was assigned to a different lender that did not record the assignment. The realtor sold the home under a short sale, took full commission then claimed she couldn’t locate the 2^nd and the customer 1st was in foreclosure and she had no time to search. She then filed a quiet title against the 2^nd? Doesn’t that constitute fraud? It is very easy to locate the 2^nd by googling the old company.

Sorry for so much, but I have read some of your answers in blogs and have much faith in you."

OK. Here goes.

A title insurance claim is made by an insured lender or owner so unless you have a loan policy covering your liens, a title claim wouldn't be an option.

In the first case, if the mortgagors are making their payments, what have you got to lose? You are in first position and that's tough luck for the new mortgagees, right?

If the mortgagors aren't making their payments, you have the option of foreclosure. If your liens are valid, you are in the driving seat. You need to consult an attorney.

The attorney may advise that you contact the new mortgage lenders directly and advise them of your position. You are now in the first position and they won't be too happy and they may force the title companies to fix the problem.

As to the second issue of quiet title, it's complicated. The courts have rules concerning notification of interested parties. The matter should be reviewed by a competent attorney who can determine whether or not the effort to find the mortgagee was adequate.

Good luck!