Economy Watch: Old Republic National Title Nervous about Foreclosed Properties

It's official: questioning foreclosure documents is a bandwagon, and it seems that many parts of the residential real estate industry are jumping on.

October 4, 2010
Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user respres

It’s official: questioning foreclosure documents is a bandwagon, and it seems that many parts of the residential real estate industry are jumping on. Over the weekend The New York Times reported that Old Republic National Title Insurance Co. sent a memo to its agents to stop writing policies on foreclosed Chase properties until “objectionable issues have been resolved.”

Last week, Old Republic’s title operation, a unit of Chicago-based Old Republic International Corp., also said that it wasn’t insuring properties foreclosed by GMAC. Both lenders have stopped foreclosures in the 23 states in which a court must approve the proceedings, and so has Bank of America.

On Friday, Freddie Mac issued a statement on the matter: “Freddie Mac is deeply concerned about recent reports that there may be affidavits that were improperly executed in connection with foreclosures. The alleged practices in these reports are clearly not in compliance with Freddie Mac’s guidelines and directives to its servicers.”

“The thing to watch is what other major title companies are going to do,” an attorney specializing in title work told CPE. “They might decide for the time being that there’s too much risk in writing policies on foreclosed properties. It’s been an open secret for some time that the level of expertise in some large mortgage operations isn’t too high.”

Construction Spending Ticks Upward

According to the U.S. Census Bureau on Friday, construction spending nationwide took an unexpected upward turn of 0.4 percent in August, despite an entirely predictable decline in residential construction. The main driver was good old-fashioned public works spending, up 2.5 percent compared with the month before, and now totaling 39 percent of all construction spending, a record.

Overall private construction spending in August dropped 0.9 percent as homebuilding outlays shrank 0.3 percent compared with July. Private non- residential projects declined 1.4 percent.

Federal government construction spending was only up 0.7 percent for the month, compared with state and local outlays, which increased 2.7 percent. On the whole, the favored kinds of construction programs for those public entities were highways and waste-disposal plants.

Incomes Sees August Uptick Too

The Bureau of Economic Analysis noted on Friday that U.S. personal income increased 0.5 percent in August compared with the month before, and so did disposable personal income, by the same amount. In July, the uptick was 0.2 percent for personal incomes compared with the month before, and in June there was no uptick compared with May.

What’s putting all that extra money in consumers’ pockets? A little bit of this, a little bit of that, with some private wage and salary growth, along with some government wage and salary growth as well. The Census Bureau isn’t distorting things much any more: temporary Census workers boosted federal civilian payrolls by an annualized rate of $0.9 billion in August, after boosting payrolls by $2.5 billion in July.

Wall Street flirted with negative territory on Friday, but ended positive, with the Dow Jones Industrial Average up 41.63 points, or 0.39 percent. The S&P 500 advanced 0.44 percent, while the Nasdaq eked out a 0.09 percent gain.