SAN FRANCISCO (MarketWatch) -- Fidelity National Financial Inc. (FNF 14.94, -0.77, -4.90%) said Friday it believes that recently halted foreclosures over potentially flawed bank documents will not adversely affect its title insurance business. Fidelity made the comment following an earlier Bloomberg News article reporting that millions of property titles could be in jeopardy because of possible faulty bank documentation practices that have stalled thousands of foreclosures. "Even if a court sets aside a foreclosure due to a defect in documentation the foreclosing lender would be required to return to our insureds all funds obtained from them, resulting in no loss under the title insurance policy," Fidelity said in a statement. Shares of Fidelity National and rival First American Financial Corp. (FAF 14.33, -0.61, -4.08%) were down more than 4% in recent activity.
What does title insurance cover? Title insurance protects you and/or your lender from losses resulting from claims against your ownership of real estate. It is unique because it provides coverage for problems or "hidden risks" (errors, forgeries, unpaid taxes, etc.) that possibly occurred before you took title to the property, yet can jeopardize your ownership rights. Title insurance coverage includes:
■Protection from financial loss (up to the face amount of the policy) due to covered claims against your title; ■Payment of legal costs to defend against covered claims; ■Payment of successful claims against your title (up to the face amount of the policy). ■ Read your title insurance policy carefully and note possible exclusions and exceptions, which may include: ■An unrecorded title defect you knew about; ■Condemned land; ■Building and zoning ordinance violations; ■Payments required (except for legal access rights) because your deed failed to provide rights of use to adjacent land, streets, alleys or waterways; ■Conveyance of title irregularities arising from a deceased person's estate, a bankruptcy estate or trust; ■Restrictive covenants limiting your use of the property; ■Discrepancies, conflicts or shortages in area, boundary lines, encroachments, protrusions or overlapping improvements; ■Right of usage claims arising if your property is on or near a body of water, river or stream; or, ■Renter or adverse possession claims from "parties in possession" of all or a portion of your property.
14:08 EDT FNF theflyonthewall.com: Fidelity National expects foreclosure halt to not have material impact Fidelity National noted that several lenders announced that they have halted foreclosures and the sale of REO properties due to possible flaws in documentation used in the foreclosure process. Fidelity National believes that this situation will not have a material adverse impact on its title business. :theflyonthewall.com