Bank of America, one of America's largest mortgage lenders and the recipient of more than $45 billion in TARP funds from the federal government, claims that United General Title Insurance and First American Title Insurance, now corporate affiliates, insured mortgages for title defects, undisclosed intervening liens and other problems, and to cover equity loans and lines of credit up to $500,000.
Now the insurers are balking at paying the claims, blaming Bank of America and the firms it acquired prior to the global economic crisis for creating their own problems, BofA says in Mecklenburg County Court.
As of February the two insurers have denied at least 2,200 of Bank of America's claims, representing more than $235 million in losses, and failed to respond to another 2,300 claims, representing more than $300 million in losses, BofA says.
All of the claims arise from a home equity loan or line of credit that is in default, the bank says.
Read more in Courthouse News.
2 comments:
What? Have they suffered a loss???? Maybe they have lost their minds, we know that they have lost touch with reality. I have never heard that a Loan Policy covers the lender if the borrower defaults. Can't wait to see how this plays out. :)
Kathy Glor
Kathy: I suspected that the root of the issue was one of First America's crappy search products. As indicated by the LA Times article - next post - that's it. This isn't about coverage because a borrower defaults. It's about not being able to foreclose because the lender doesn't have a good lien because the insurer did not follow traditional search methods prior to issuing the policies.
Does anyone remember the big hoohah we had over TitleSmart and Next Ace?
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