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Title insurance error nearly causes a foreclosure 18 months after purchase

Failure at escrow causes major trouble

Title insurance is a standard part of closing a contract on any home and acts to protect a homebuyer against any possible existing liens on the property, but when a title insurance makes a major mistake and advises a homeowner not to file a claim, the foreclosure process can begin which is exactly what a Washington state couple is currently learning the hard way.

Hisham and Anna Othman purchased a home over a year and a half ago and believed everything was clear, but this summer began receiving notices of default with the previous homeowner’s name on them and came home one day to find an auction notice taped to their door that proclaimed the auction would cover a lien against the property.

According to KOMO News who was approached by the couple, Hisham called the trustee behind the notice, saying, “Listen, you have the wrong person. We bought our house fair and square. We didn’t have any lien against it.”

Couple gets very bad advice

Hisham was right, they did not have any existing liens, but the previous owners sure did and the escrow company did not pay the lien in 2010 as they should have. When the couple called the title company, they were allegedly told, “Don’t worry. We’re aware of the situation. Our legal department’s working on it” and when Hisham said he wanted to file a title claim, they told him in August not to worry about it. Now, the couple is two weeks away from the auction date with no progress from the title company who has no comment on the matter.

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In addition to a fast approaching auction date, the couple discovered that the credit union holding the lien had been attempting to get the money from the escrow company for months before they ever notified the homeowners. The credit union told KOMO that since June when they reached out to the escrow company about the pending foreclosure, they failed to respond.

Within 48 hours of the news station contacting the escrow company and launching an investigation, a check was sent to the trustee, but what of homeowners that are ignored by media or homeowners that don’t know that they have recourse? Should it really take a journalist poking around to get a simple issue cleared up? It would seem that in such a lawsuit-heavy era, all parties to a real estate transaction would go above and beyond to cross their Ts and dot their Is.

Photo courtesy of Tim Pierce.

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