The unstable economy has triggered an increase in the number of problems with title records. Foreclosures may be an obvious cause, but financial pressures create title problems in other ways. Bank failures, mortgage assignments, divorces, bankruptcies, business disputes, and credit delinquencies are a few of the reasons that title records are clogged with liens and other problems. At TitleSearch.com, we see the number of problems as alarming.
The sheer volume of mortgage refinancing since 2001 has strained the government recording system. County recorders are experts at records maintenance. However, budget cuts have made it harder for them to keep up with the growing volume of lien recordings and foreclosures.
Records show some county recorders handling thousands of liens and foreclosures per week. The title documents searched show dramatic increases in liens on properties. We used to see an occasional lien. Now it is an everyday occurrence
More people are finding unexpected mechanics liens, spousal support liens, and judgment liens on their own properties, or real estate they are considering to purchase. Creditors are more likely to place a lien on any asset they can, to protect their interest. In some cases, the asset may not even be still owned by the debtor. Some title reports obtained show liens and mortgages placed on properties with no apparent relation to the borrower or lender.
In 2008, we saw a 250% increase in the number of liens found on our title searches, in all 50 states. As of last month, the trend is still higher. This creates a problem for buyers, investors, and attorneys looking to determine the status of a property.
For investors, title searching has become more complex. Many buyers used to be able to run a quick electronic search of property records online. More often, it is necessary to run a full-blown manual search on properties, because liens could be anywhere.
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December 15, 2008 at 1:32 am
[...] rental property fraud Jump to Comments In September, I wrote that the unstable economy, and real estate crash will increase the frequency of title problems and [...]