Although not applicable in every state, equitable subrogation laws are often used by insurers as a safety net in the case of searching discrepancies. In this case, (OCWEN Loan Services, LLC, v. Quinn, et al., Feb. 7, 2017) defendants Mr. and Mrs. Wuebbens conveyed their home to their daughter in 2004, while retaining life estates. The Wuebbens and their daughter executed a mortgage in 2005. In 2007, the daughter refinanced the home with IndyMac Bank F.S.B., using the proceeds, in part, to pay off the original mortgage. IndyMac’s title commitment failed to disclose the parents’ recorded life estate interests in the property and the Wuebbens did not consent to the mortgage (OCWEN Loan Services, LLC, v. Quinn, et al., Feb. 7, 2017). When the the daughter defaulted, and Indymac filed an action to foreclose the mortgage, the Weubbens challenged the mortgage priority over their life estates. The Court granted OCWEN (successor in interest to IndyMac) a priority interest in property (partial).
Read the full article originally from the American Land Title Association (ALTA) website here.