Ticor Sues Countrywide in Bad Loan Case; Trend Could Create 'Chaos,' Expert Says
A lawsuit filed in Illinois by a major title company against a major mortgage lender concerns just one Chicago mortgage.
But, if plaintiff Ticor Title, or other title insurers, start taking the same approach to other troubled properties, there could be big implications for the rest of the country, the Chicago Tribune reports.
“You would have chaos,” predicts attorney Tom McNulty of Neal, Gerber & Eisenberg.
Ticor, one of the largest title insurers in the country, says in the Cook County Circuit Court suit that it shouldn’t have to honor a title policy it provided concerning a graystone in the ritzy Kenwood neighborhood of Chicago’s South Side. That’s because Countrywide was “reckless and grossly negligent in its underwriting” of a $360,000 mortgage used to purchase the property in 2007, Ticor contends in the suit, which was filed last month in the court’s Chancery Division.
The $360,000 was one of two simultaneous Countrywide mortgages totaling $450,000 that paid the entire purchase price for the graystone, the newspaper notes. After the transaction closed, the buyer never made a single mortgage payment, and the home went into foreclosure.
Another Chicago Tribune article earlier this year tells the story of a gruesome discovery made about the home on Jan. 9, after buyers who had purchased it at a foreclosure auction came to inspect the property. The mummified body of the previous owner, Randy Johnson, was found sitting fully clothed in a chair inside. Beside him was a dead dog.
“Somehow, Johnson’s house was transferred three times to new owners without anyone noticing he was inside,” the article says.
A subsequent investigation showed apparent mortgage fraud, and Ticor is apparently seeking a declaratory judgment that it doesn’t have to honor the title policy or defend a court challenge to the ownership of the Kenwood property, according to the Tribune coverage.
Although Ticor contends that Countrywide was solely at fault, allegedly issuing a mortgage without appropriate underwriting safeguards, experts, including McNulty, say the title company should have spotted an apparently fraudulent deed purporting to convey the property from Johnson, the newspaper writes.
But Ticor had reportedly subcontracted the title review work to another company, which is now out of business and under investigation for mortgage fraud.
Write a letter to the editor, share a story tip or update, or report an error.
