January 20, 2009
The CLTA plans to file a brief with the Court of Appeals in a pending case involving the issues of rescission of a title policy and a claim of escrow negligence. In Gateway Bank v. Ticor, the issue is whether a title insurance company can rescind a policy based on a fictitious loan. In particular, the fictitious loans were fabricated by the named insured and later acquired by the financial institution that provided the credit facility to the insured. Gateway Bank also involves the question of whether the warehouse lender, that was not a party to the escrow, can state a negligence claim against the title company that handled the escrow of the mortgage banker that engaged in the fraud. The case arises out of a complex mortgage fraud scheme of a now-bankrupt mortgage banker that was the subject of a federal criminal investigation.