Friday, April 27, 2012
Mortgage Termination Lawsuits Do Not Give Associations Clear Title
The largest title insurance company in Florida (Attorneys’ Title Fund Services, LLC, also known as “The Fund”) recently published an opinion by its underwriting counsel cautioning attorneys and title insurance companies against closing and insuring any transaction where the association’s title was obtained through a “mortgage terminator” lawsuit.
What is a “mortgage terminator” lawsuit? It is a marketing term used to describe a lawsuit filed by a condominium or homeowners’ association, after the association has taken title to a unit (typically through foreclosure of the association’s lien). After acquiring title to the property, the association files suit against the lender (the owner of the mortgage) to “terminate” the mortgage. When the lender fails to appear, a default judgment is entered granting the relief sought which includes cancellation of the mortgage of record.
Read more here