Houses purchased out of foreclosure may have defective titles!!!
Unlike the actual foreclosure, this is ABSOLUTELY something that FNF will have to cover and mitigate.
Example: I bought a bank foreclosure that is determined to have been an illegal foreclosure, the original owner sues the bank to regain title... FNF reviewed. approved and insured my rights to the title.. My right to the property is now challenged... Who pays??? FNF!
As I've said many times on this board in several posts, the court approved the foreclosure and the buyer relied upon that approval in "Good Faith". Therefore even in the unlikely event that the court were to recind it's foreclosure approval it would require the lender to make the buyer whole. It's as simple as that.
Even if an original owner was so stupid as to sue for his property back and actually won - which is very unlikely - all he or she would gain is a mortgage that is still underwater and have to go through foreclosure all over again.
By the way, I've recently purchased 7,750 very cheap shares because of all the confusion over this issue.
As I have said before, you have to keep in mind not all States do judicial foreclosures, so many foreclosures never have court approval. Typically a Mortgage state uses a judicial foreclosure method and a Deed of Trust state does not.
I never said anything about them having "no losses" but I said they were minimal. Their losses will be mainly in the time they spend on these not in writing of claims checks.
I don't believe for a second that you have already lost title to a house because of this issue! If you did then your title policy will cover you for that and the title insurer will recoup that loss from the lender who inappropriatly foreclosed.
But I think his comments are actually a huge line of bull.
You apparently have not read the previous posts on this issue. The title company will have a responsibility to defend their insured, but they also have a right to seek recovery from the foreclosing lender. So all that will happen is that the title insurer will turn to the lender to correct their foreclosure. If for some odd reason the foreclosure is totally overturned and title is retured to the borrower who lost the property, their loan would be reinstated and the lender would have to return the proceeds from their sale to the purchaser. There will be no big losses to title insurers on this issue.