2008-08-17chicagotribune.com

Ticor Title, one of the largest title insurance firms in the country, is suing Countrywide Home Loans, the nation's largest home lender, saying it shouldn't have to pay out on a title policy because of Countrywide's gross negligence.

The suit, filed last month in Cook County Chancery Court, concerns just one Chicago mortgage made by Countrywide in 2007, but the implications are enormous, say real estate and title insurance experts.

If title insurers refuse to honor their policies, "You would have chaos," predicts Chicago real estate attorney Tom McNulty of Neal, Gerber & Eisenberg. The fate of tens of thousands of troubled properties around the country would be thrown into limbo while lenders and title insurers duke it out. Other deals would be held up because buyers and sellers would be reluctant to move forward without title insurance to protect their investment.

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"Ticor was expected to have done its job before it issued the insurance policy. Once it does that, it's a written contract and everything else irrelevant," said Barry Epstein, a forensic accountant and litigation consultant in Chicago.

"Now they're shocked that Countrywide might be sloppy, but that's what they were supposed to check out before issuing the policy. … If the policy is valid, they are going to have to pay."


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