There is no doubt the foreclosure problem is getting worse; we haven't seen the bottom yet.  CNNMoney.com is reporting that foreclosure filings in the second quarter of this year are up 120% over the same period last year!  One of every 171 households received a notice of default, auction sale notice, or bank repossession notice.  The second quarter was so bad that RealtyTrac will have to "reevaluate its foreclosure forecast" for the year.  According to RealtyTrac CEO, James Saccadic, they had been predicting 1.9 million to 2 million foreclosures for 2008.   "But midway through the year, we're already at 1.4 million," he said.

And, there is more bad news.  Bank repossessions are up as a proportion of total filings, representing 30% of the notices issued during the second quarter, up from 24% a year ago.  But, the numbers do not show how truly awful things are.  There is something else that the numbers aren't telling us... something that makes that whole foreclosure epidemic even worse that it seems.

Sometimes even a thorough search does not reveal all of the title problems.  I recently became involved in a commercial real estate transaction that includes a thirty-foot strip with two competing claims to ownership.  Interestingly, the problem would not have even been detected in a 100-year search.  The county has even been taxing both claimants on the parcel for more than 20 years. They have not yet figured out how to resolve the problem, even with discussions involving the tax map office, the auditor's office, the treasurer's office, and the county prosecutor's office.

Many people think the most dangerous thing about public record Web sites is the risk of identity theft. The fact is, government Web sites can cost you  much more than your identity. They can cost you your life or the life of someone you love.

I recently wrote a blog about the vague search standards set forth in Ohio's title insurance laws (see A Reasonable Examination Of Title). After speaking with a title professional in Arkansas about their more strict requirements, I became curious.  I wanted to know if Ohio was an anomaly.  Could it be that most states have good, solid requirements for the title evidence used to determine the insurability of title?  Not surprisingly, Arkansas turned out to be the anomaly.

Stock in Fannie Mae and Freddie Mac are down more than 85% in the past year.  As government-sponsored enterprises, there has always been an implicit federal backing.  Recent moves make it look more like an explicit federal guarantee.  The logic is clear - Fannie and Freddie own or guarantee about half of the mortgages in the U.S. market, approximately $5 trillion, and they must not be allowed to fail at any cost.  But what are the real costs and who will bear the burden?

It has been recently reported that many of the underwriters are re-evaluating many of their agency relationships and canceling agreements that are not in-line with profitability and claims expectations.  This will likely mean a further shift toward more direct operations, but is that a good thing for the underwriters?  In a down market, direct operations mean higher fixed costs that are more difficult to control when revenues decline. Fitch has described this as a "primary risk" factor and A.M. Best has also recognized the advantages of agency operations as a distribution channel.

I was recently asked why I started the Source of Title Blog.  I thought that was an interesting question and it made me think. What is the purpose of the blog and what I get out of it?  I have been writing two or three entries each week since January 2007.  It has been something that I have enjoyed doing and I plan to continue blogging.  I enjoy the discussions that my posts sometimes generate and I look forward to comments, whether they agree with me or not.  But, why do I do it? Hmmmm... that is a tough question.

Though it's not the primary purpose of the title insurance industry, title companies have always played an important role in the process of collecting judgments.  When an interest in land was conveyed, whether it was a sale or a new mortgage, the title company did a thorough title search and if there were any judgment liens they were required to be paid off before the transaction could proceed.  The main function of this, of course, was to clear the title so a policy could be issued.  However, as a secondary matter, it assured creditors that they would get paid if the debtor tried to dispose of their interest in the encumbered property.

Today, shoddy workmanship and a drastic decline in search standards means that judgment creditors can no longer rely on the system.  That is bad news for creditors.

The title industry is rapidly changing and there are two distinct movements afoot: one dominated by the underwriters and the other is attorney controlled.  There is no shortage of critics on either side of the battle, however, most seem to prefer neither.  That is not realistic - one side will win in the end and the many small independent agents and abstractors are going to get squeezed out of the industry.  It may be time to step up and realize that changes are coming and get behind one or the other... so choose your poison carefully.

Cash cow for Abstract Companies and Lawyers