Actually, in
MidFirst Bank v. Abney, title insurance did pay a claim to the buyer who was foreclosed against on the missed mortgage. It was the insurance company who asserted the insured's warranty claim against the seller.
Also, re-opening the first foreclosure to include the lender of the missed mortgage was not likely an option. It was actually the second mortgage holder foreclosing and it was the first mortgage that was missed; their proceeds were long gone. I had to read it three times and I still could not figure out how that happened. You would think somebody would have noticed, somewhere along the way.
As for three searches in a foreclosure - well, here it seems to be the practice of most to update their title work at those stages you describe, but if something gets missed the first time - it would probably get missed on an update also.
I agree that MidFirst Bank v. Abney is a rare example of what can go wrong. However, with the changes in this industry the past few years, I don't have a hard time believing that it happened. The safeguards you speak of just aren't as safe as they used to be.
Best,
Robert A. Franco
SOURCE OF TITLE
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