Are the title companies in trouble for insuring robo-signed REO sales, or MERS-related transactions?  

Kingside said, “Not if the sellers are using grant deeds”. 

Here’s the definition:

grant deed n. the document which transfers title to real property or a real property interest from one party (grantor) to another (grantee). It must describe the property by legal description of boundaries and/or parcel numbers, be signed by all people transferring the property, and be acknowledged before a notary public. The transfer is finalized by recording with the County Recorder or Recorder of Deeds. Importantly, a grant deed warrants that the grantor actually owned the title to transfer, which a quit claim deed would not, since it only transfers what the grantor owned, if anything.

A check of recently sold REO properties revealed that four major servicers – BofA, Wells Fargo, J.P.MorganChase, and IndyMac/FDIC – are all using grant deeds to convey ownership to the buyers.  The grant deeds include the warranty, which should relieve the title insurers from responsibility (and put it on the servicers) for robo-signed deocuments fouling up the chain of title.

Click here for an Example of a Grant Deed used recently – remember the bank-owned house in Olivenhain listed for $999,000 that had 17 offers?  It closed for $1,170,000, or 17% over list price.  You can verify that sales price by taking the documentary transfer tax, $1,287 (at top of grant deed) and dividing by .0011.

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