Title insurance: An obscure force hampering home sales, a new form of “redlining?”   

As the city tries to deal with hundreds of abandoned houses, the refusal of title insurance companies to sign off on bank mortgage loans is a problem here and nationwide.

Officials discussed it Wednesday at a joint meeting of the city council housing and neighborhood committees.

In theory, when a county takes over and sells a property, that is supposed to clear the title.

But there have been a few court cases that found counties did not make enough effort to contact lien holders or others.

Almost no one sues over the matter but title insurance companies are more timid than mice.

“They are really not willing to take risks,” said Councilman Dan Fowler.

Councilwoman Katheryn Shields said, “What the title insurance companies are doing here and across the nation is just another form of redlining.”

She suggested the city and Jackson County consider providing a type of insurance in which they would agree to defend any lawsuit filed contesting the titles of things like houses acquired from the Kansas City land bank, renovated and sold.

Dianne Cleaver, executive director of the Urban Neighborhood Initiative, said the fear of clouded titles is a major problem in renovating abandoned houses on the east side.

Her group has considered advocating for changes in state law that would clarify notification requirements, she said, but counties are against it because they fear it would be more work and expense for them.

The matter is frustrating, she said, because almost no lawsuits challenge titles on the houses and any damages won though one would be minimal.

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