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""Fidelity National Financial"":http://www.fnf.com/fnf/, the nation's largest title insurer, will soon begin requiring lenders to provide the company with an indemnity agreement that guarantees the accuracy of their foreclosure documentation before Fidelity will insure the title of a repossessed home.
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The move was prompted by the recent foreclosure freezes enacted by at least five major mortgage servicers and disclosures of errors made in the processing of foreclosure paperwork.
The Florida-based title insurer alerted its employees of the new policy this week. According to a _Bloomberg_ report, an indemnity covering ""incompetent or erroneous affidavit testimony or documentation"" must be signed for all foreclosure sales closing on or after November 1.
[COLUMN_BREAK]The news agency says Fidelity's decision was made in consultation with the ""American Land Title Association"":http://www.alta.org, and the government-controlled mortgage finance companies ""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com.
Fidelity reached an ""agreement with Bank of America"":http://dsnews.comarticles/bank-of-america-and-fidelity-national-reach-agreement-for-reos-2010-10-18 last week to assuage the insurer's concerns about BofA's paperwork problems.
Under the agreement, Fidelity will continue to provide title insurance for Bank of America's recently foreclosed homes and defend new homeowners in court should questions arise about ownership. BofA agreed to cover all of Fidelity's court costs and settlements related to any lawsuits that might result.
Fears of title-ownership discrepancies have put REO sales on hold in many markets until banks can verify that the supporting foreclosure documentation is valid. Some title insurers have said they ""will not issue policies"":http://dsnews.comarticles/stewart-evaluating-title-insurance-for-foreclosures-case-by-case-2010-10-13 for the foreclosed homes of certain lenders undergoing paperwork reviews.
More widespread use of warranties and indemnity agreements between lenders and title insurers could move stalled sales forward. Fidelity National told _Bloomberg_ that the indemnity agreement it drafted is available for use by all title insurers.
