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Mortgage industry lawsuits are beginning to stack up â€" Federal Home Loan Banks are suing lenders, lenders are suing insurers â€" all in an attempt to recoup losses from a[IMAGE]crippling national housing crisis. In the latest rendition of the industry's legal series, ""Bank of America"":http://www.bankofamerica.com has brought a suit against ""First American Corp."":http://www.firstam.com
BofA claims First American failed to provide proper title searches on more than 5,500 home equity loans, resulting in $535 million in losses for the lender. In the suit, filed in
[COLUMN_BREAK]a Charlotte, North Carolina court where BofA is headquartered, the bank alleges that First American relied on borrowers to disclose information about other liens on their properties, rather than conducting traditional, independent title searches to ensure there were no competing ownership claims.
""Bank of America had a reasonable expectation to be paid its charge-off amount or unpaid principal balance as the amount of loss in the event of an insured defect under the … policies,"" the lawsuit states.
But according to multiple media reports, the title policies were issued under what was called the QuickClose Program, more of a ""lien protection"" plan than full-fledged title insurance. Mortgage lenders, including Bank of America, started turning to these lien protection plans because they were faster and cheaper, in order to keep up with the pace of the booming real estate market in the middle part of the last decade.
Bank of America says it has been forced to write off between $1.5 billion and $2 billion for bad home equity loans each quarter.
