Pub. 2 2011 Issue 2

summer 2011 19 Mike Aiken began as a Title Attorney and Compliance Officer at Investors Title Insur- ance Company in 1998. Currently he oversees compliance for out-of-state operations and serves as senior counsel for the Underwriting Support Group at the company’s headquarters in Chapel Hill, North Carolina. Mike is a frequent speaker on a number of title insurance topics and compliance matters affecting title agents, lenders and attorneys. We invite you to visit Investors Title Insurance Company and West Virginia Bankers Title during the WVBA convention in July. years. Funds were transferred between various banks and bank accounts to cover monies that had been used to live the lifestyle of the rich and famous. It is possible that the owner used the funds to purchase extravagant property throughout the United States as well as expensive boats. It even appears that large gifts were made to relatives. According to reports, it is estimated that the owner had stolen approximately six million dollars of escrow funds from hundreds of people. You are now getting telephone calls from all your existing lenders demanding that you pay the loans or they will begin foreclosure proceedings. Shortly after the calls from angry lenders, you receive a telephone call from the title insurance underwriter who issued the title insurance com- mitment and is to subsequently issue the owner’s and lender’s policy on your new house. As it turns out, you are generally protected by the title company. The protection does not arise under the title insurance com- mitment, but the funding lender had requested and received a closing protection letter. In part, the closing protection letter protects a lessee, purchaser, or lender against loss, which affects the status of title, arising from fraud or dishonesty of the issuing agent or the approved attorney. In this case, the title insurance company paid off the builder, the bridge loan, and the existing loan on the house that was being sold, including accrued inter- est and penalties. In most cases, the closing protection letter is issued by most underwriters at no charge. If you are interested in learning more about the coverage provided by this type of letter or how to obtain a closing protection letter, please contact your local title insurance agent. Closing protection letters provide protection against loss due to fraudulent acts. Let your title insurance company help you manage the risk. n The claim example in this story is real. The names of the parties involved have been changed to protect their privacy.