This foreclosure debacle is a non-issue for Fidelity:
Before a foreclosured property can be sold the court issues a foreclosure title based upon documentation and testimony of the lender.
Fidelity issued a policy based upon the validity of the foreclosure title. Even if the court were to withdraw that title - which is very doubtful - it than would have to require the seller to make the good faith buyer whole.
Fidelity only insures the past not the future actions of a court. Therefore this foreclosure debacle is a non-issue and a buying opportunity for Fidelity.
Foreclosure/short sales are 30% to 40% of the housing market today, and as "extend and pretend" rolls on, will likely become an EVEN GREATER percentage. If the title cos. refuse to write policies on these transactions (as ORI has already done), what does this imply for volumes? Forget having to defend their existing policyholders (which they will have to do)...the business is rapidly drying up. More unintended consequences of a refusal to face reality in the housing market.
Each one of Fidelity's policy holders has a foreclosure title issue by a court and sense title insurance only insures the past not the future those titles were valid at the time the policy was issued. Therefore the insured has no claim against Fidelity - period.
Fidelity will continue to insure properties with foreclosure titles issued by a court. Therefore volume of insured policies will not be effected.