Alert To Problems Of Grossly Inaccurate Documents Used In The Land Title Underwriting For Commercial Real Estate Financing
From the report.
Harbinger Analytics Group has discovered a widespread problem of inaccurate (and fraudulent) documents used in the land title underwriting for commercial real estate financing. This fraud is accomplished through inaccurate and incomplete filings of statutorily required records (commercial land title surveys detailing physical boundaries, encumbrances, encroachments, etc.) on commercial properties in California, many other western states and possibly throughout most of the United States.5
Because title insurers performing land surveys in-house and independent land surveyors 6 (often hired by lenders, title insurers and/or national land survey brokerages claiming ownership of completed work product) have committed actual and/or constructive fraud by knowingly failing to conduct accurate boundary surveys and/or failing to file the statutorily required documentation in public records, owners, lenders or CMBS holders of these commercial properties may be able to recover 100% of their purchase price from their title insurers based on contract rescission claims.
Owners, lenders and CMBS holders may also be eligible for “put backs” of these afflicted properties if the loans were insured by the FDIC (for example, assets acquired, packaged and resold through bank closures or TALF via the PPIP program). Harbinger Analytics informed the FDIC (by detailed reports) about potential problems in the commercial real estate loans in July 2009. Harbinger Analytics also informed one of the four primary title insurer‟s executives and general counsel (by detailed reports) of the failures, fraud and exposure to liability in their underwriting way back in early 2007.
Full copy of the report below…