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Showing posts from June 14, 2009

Protecting your interests. The basics of title insurance

If you’re planning to buy a home, the topic of title insurance will likely surface in one of the many discussions you’ll have with your Realtor or seller. Like most types of insurance, title insurance is better to have and not need, than need and not have. But what is it, why do you need it, and how does it work?What is title insurance?Essentially, title insurance is a specialized insurance policy that protects your mortgage lender against mistakes made in a title search. If you fall in love with a home and there’s not a clear title to it, title insurance protects the bank – and you – if there’s a problem. A clear title means you’ll be able to occupy and use the property the way you want, and that you’re able to sell or pledge your property as security for a loan. There are generally two types of title insurance: lender’s and owner’s title insurance. The lender’s policy is usually based on the dollar amount of your loan and protects the lender’s interests in the property against a pro…

Title insurance has value

Fraudulent activity has escalated from cheque-writing scams to identity theft to actually stealing your home right out from under you.What many homeowners don't realize is that title insurance could prevent or assist in correcting fraudulent activity.For a one-time fee (that in many cases works out to less than the annual premium for an average homeowner's insurance policy), title insurance protects a purchaser against anything that may hinder clear possession of the property.This coverage will pass to family members, as in the case of an inheritance.Title insurance is purchased when title is conveyed. It is usually acquired through the lawyer handling the transfer of ownership, and actually may eliminate the need for thorough title searches.It is also no-fault insurance so that if a problem arises, you simply make a claim, unlike the traditional process of having to prove negligence on the part of the lawyer conducting the searches.Title insurance ensures clear title, but it …

A Very Strange Divergence in Title Insurance

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This is one of the few times I'd like to have ready access to analyst reports. I am completely boggled by the massive divergence among the two title insurance companies we own. While both faltered badly once interest rates started to rise (hurting mortgage applications and by transitive theory, titles), First American (FAF) has fought back to its 200 day moving average while Fidelity National Financial (FNF) has continued down at a nearly 45 degree angle, even as Treasuries have rallied here the past 5 sessions buffering the rise in mortgage rates.

Granted, the latter is more a pure play on title insurance, but this is one serious variance. There must be something going on specific to FNF and "someone" obviously knows "something" - but I definitely do not know what it is. On valuation I'd like to add here, even if its a very busted chart, but it just continued to falter almost on a daily basis and make new lows. In fact, it is lower than it was at any point …