Bank of America has filed suit against First American Title for 500 million dollars. It would seem the good ole boys at B of A think that the limited title policies issued as a part of their quick close program have resulted in losses. What's fantastic about this lawsuit is that it seems inconceivable that title issues could have contributed to a loss of this magnitude. Maybe the Boys of BofA should look a little harder at the limited documentation (stated income stated asset) requirements THEY developed as well as the negative amortization arms that they marketed rather than fishing for money courthouse.
I would be very interested in seeing what actual losses B of A is claiming directly from title defects. Rarely do you see a title defect as the underlying reason for someone to default on a mortgage. After all the title insurance protects the lender from underlying liens, property line disputes, etc. Title insurance unlike mortgage insurance does not protect from underlying credit risk.
Also it appears that the SEC is being sued for failing to detect and stop Bernie Madoff's ponzie scheme. I have not had a chance to see the actual filing so I have no idea by what theory they plan to prevail. Should make for some interesting reading.
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